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Many & LoCoco Legal Blog

Friday, November 30, 2018

Using Your Will to Dictate How to Pay Off Debts

Most people realize that they can use their last will and testament to set out who should receive particular assets or income. However, few people understand that they can also describe how they would like specific debts paid off in their will as well. Unfortunately, many of your debts do not just disappear when you pass away; they are often passed on to your loved ones to address.

Thankfully, some careful planning and forethought now can help your family and friends deal with these issues much more efficiently in the future, cutting down on confusion and stress.  

Types of Debts You May Leave After You Pass

Generally speaking, there are two types of debt. Which kind you have will affect how you can pay these items after your death.

1. Secured Debt.

Debt that is connected to an object is considered “secured debt.” That is, the debt is attached to some object or real property. The most common examples of these types of debts are a mortgage or a car payment. If you do not pay these debts, you could lose whatever property is associated with the debt.

2.  Unsecured Debt.

Unsecured debt is much more fluid. It is not associated with any particular object, even if you used credit to purchase the object. Credit card obligations and medical bills are two of the most common unsecured debts.

Leaving Loved Ones Property (and Debt!)

If you leave a loved one an object that is connected to debt, then that debt will also move with the property. For example, if you bequest your loved one your house, but you still owe $30,000 on your home, then your loved one has not only gained a house, but he or she now has a $30,000 debt as well.

Many people overlook these debt obligations when they craft their will or trust documents. Failing to account for how that debt will be repaid can put unnecessary strain on your loved ones if you fail to plan properly.

You can explicitly state whether you want your loved one to take on the debt in your will. Otherwise, your loved one may simply sell whatever property you have provided to obtain the equity from it, instead of taking on your debt obligation.

Setting Out How Debts Will be Paid

You can state how you would like debt to be paid in your will. Generally, your debts must be paid before your executor can make a payment to beneficiaries. However, you can state, for example, that you would like a specific bank account to be used first to pay debts. You may also indicate which particular property you would like sold to pay debts, instead of having that property pass on to your heirs. You can get creative with how you want to address your debt obligations.

No matter what you do, it is crucial that you do something. Sticking your loved ones with debt or using your entire estate to pay debts is not practical or beneficial for anyone. Your estate planning attorney can help you craft a plan that will work for your particular situation.

Chip LoCoco

New Orleans Estate Planning Attorney

 


Wednesday, November 14, 2018

Judgment of Possession - Transferring Title after Death


Attorneys sometimes forget that certain legal matters which we consider hornbook and obvious, to our clients it is uncharted territory. One such question I often get, and one that I do my best to make sure to explain fully to all clients so they know the answer, regards the transfer of a home to the surviving spouse after the death of the other spouse. The best way to explain the mechanism of what happens is to use an example.

Bob and Mary Wayne have been married for 50 years. The year they were married, 1968, they bought a home on St.


Read more . . .


Thursday, November 8, 2018

Responsibilities and Obligations of the Executor/Administrator

When a person dies with a will in place, an executor is named as the responsible individual for winding down the decedent's affairs. In situations in which a will has not been prepared, the probate court will appoint an administrator. Whether you have been named  as an executor or appearing as the administrator, the role comes with certain responsibilities including taking charge of the decedent's assets, notifying beneficiaries and creditors, paying the estate's debts and distributing the property to the beneficiaries.

In some cases, an executor may also be a beneficiary of the will or as administrator may be an heir of the decedent, however he or she must act fairly.

An executor/administrator is specifically responsible for:

  • Finding a copy of the will and filing it with the appropriate state court or opening the estate of someone without a will.

  • Informing third parties, such as banks and other account holders, of the person’s death

  • Locating assets and identifying debts

  • Providing the court with an inventory of these assets and debts

  • Maintaining any assets until they are disposed of

  • Disposing of assets either through distribution or sale

  • Satisfying any debts

  • Appearing in court on behalf of the estate

In the role of succession representative, the executor/administrator can pay all of the decedent's outstanding debts and distribute the property to the beneficiaries according to the terms of the will or the heirs. They are also is also responsible for filing all federal and state tax returns for the deceased person as well as estate taxes, if any. Lastly, an executor or administrator is entitled to compensation for the time he or she served the estate. 

In the end, being named an executor or appointed as an administrator ultimately means supporting the overall goal of distributing the estate assets according to wishes of the deceased or state law. In either case, an experienced probate or estate planning attorney can help you carry out these duties.

Chip LoCoco

A New Orleans Estate Planning Attorney

(504) 483-2332


Friday, October 12, 2018

The Basics of Powers of Attorney

A power of attorney is an estate planning document that has a variety of uses. There are several types of these documents available, and each one performs a slightly different function. One or more of these plans may be a good idea to include as part of your estate plan.

 

What is a Power of Attorney?

A power of attorney gives another person permission and authority to make decisions regarding various aspects of your life if you can’t make those decisions yourself or if you just want to hand over control to a friend or loved one for any other reason.

A power of attorney gives someone else the ability to make decisions for you. You are essentially authorizing this other person to act on your behalf.

You must complete a document to give this power to someone else. This document needs to be notarized and witnessed. 

Types of Powers of Attorney

Several kinds of powers of attorney may be useful for your estate plan. These often overlap in many circumstances.

  • Durable General Power of Attorney. This power of attorney is the most extensive option available. It gives the agent broad authority to make decisions and take action on your behalf. These are often used in situations where you become incapacitated or you are unavailable for any other reason. It is crucial that you trust the person you are granting this power to because this type of document can be prone to abuse. The word "durable" means that the   power of attorney will still be active even if you lose your mental capacity.
  • Limited or Special Power of Attorney. This document applies to only very specific aspects of your life. For example, you may want to grant someone control over a property to maintain and manage it while you are out of the country. A document that fulfills this purpose may be limited in both timeframe and scope.
  • Springing Power of Attorney. This type document only “kicks in” if certain conditions are met. The most common example is one where you lose mental capacity, and you have arranged for a loved one to take care of your affairs if this happens. Be careful though, because of  HIPPA laws, it sometimes makes it difficult to prove a person's incapacity without having an existing power of attorney in place so one can speak to a doctor or review medical records.
  • Healthcare Power of Attorney. A healthcare power of attorney gives someone the authority to make your healthcare decisions if you are disabled due to illness or an accident. This person will provide doctors with permission to operate, for example, as well as make all medical decisions on your behalf. It is critical that you let this person know your expectations regarding how you want your healthcare to move forward in these situations. particularly with end of life issues. A Living Will, or advance medical directive, works in conjunction with a healthcare power of attorney as it puts on paper your desires relative to those issues.

Someone who creates a power of attorney must be competent at the time to do so. That means that planning ahead is vital to creating a valid, legal power of attorney document.  Also, keep in mind that you can appoint the same individual as your agent for both the financial and healthcare power of attorney, or you can appoint different people for each one. The choice is totally up to you. Perhaps you have one child who is a financial wiz and another child in the medical profession. Thus, you may want to appoint each respective child as agent for their area of expertise.

The key to all of this is signing a power of attorney while you have the capacity to do so. So many times in my law practice I am called in to do a power of attorney, but the individual does not have the capacity to sign. At that point, the families only option is interdiction which can be costly. That is why powers of attorney must be a part of every estate plan.

Chip LoCoco

Attorney at Many & LoCoco

504-483-2332 

 


Wednesday, September 5, 2018

Interdictions


Interdiction is its own area of Louisiana Law, yet one that is not understood by a lot of clients. So this brief article will attempt to explain just what it is and the procedure required to obtain a Judgment of Interdiction. Of course, the Tom Benson matter did bring the world of Interdictions to the forefront of the news media.

WHAT IS THE PURPOSE OF INTERDICTION?

For some members of our society, legal protection may be necessary even after they have entered adulthood.  These individuals may have been injured in an accident, continue to suffer from an incapacitating physical illness or psychological disorder, or because of their age, they are prevented from caring for themselves.


Read more . . .


Thursday, August 30, 2018

Self-Settled vs Third-Party Special Needs Trusts

Special needs trusts allow individuals with disabilities to qualify for need-based government assistance while maintaining access to additional assets which can be used to pay for expenses not covered by such government benefits. If the trust is set up correctly, the beneficiary will not risk losing eligibility for government benefits such as Medicaid or Supplemental Security Income (SSI) because of income or asset levels which exceed their eligibility limits.

Special needs trusts generally fall within one of two categories: self-settled or third-party trusts. The difference is based on whose assets were used to fund the trust. A self-settled trust is one that is funded with the disabled person’s own assets, such as an inheritance, a personal injury settlement or accumulated wealth. If the disabled beneficiary ever had the legal right to use the money without restriction, the trust is most likely self-settled.

On the other hand, a third-party trust is established by and funded with assets belonging to someone other than the beneficiary.

Ideally, an inheritance for the benefit of a disabled individual should be left through a third-party special needs trust. Otherwise, if the inheritance is left outright to the disabled beneficiary, a trust can often be set up by a court at the request of a Tutor/Curator or other family member to hold the assets and provide for the beneficiary without affecting his or her eligibility for government benefits.

The treatment and effect of a particular trust will differ according to which category the trust falls under.

A self-settled trust:

  • Must include a provision that, upon the beneficiary’s death, the state Medicaid agency will be reimbursed for the cost of benefits received by the beneficiary.
  • May significantly limit the kinds of payments the trustee can make, which can vary according to state law.
  • May require an annual accounting of trust expenditures to the state Medicaid agency.
  • May cause the beneficiary to be deemed to have access to trust income or assets, if rules are not followed exactly, thereby jeopardizing the beneficiary’s eligibility for SSI or Medicaid benefits.
  • Will be taxed as if its assets still belonged to the beneficiary.
  • May not be available as an option for disabled individuals over the age of 65.

A third-party settled special needs trust:

  • Can pay for shelter and food for the beneficiary, although these expenditures may reduce the beneficiary’s eligibility for SSI payments.
  • Can be distributed to charities or other family members upon the disabled beneficiary’s death.
  • Can be terminated if the beneficiary’s condition improves and he or she no longer requires the assistance of SSI or Medicaid, and the remaining balance will be distributed to the beneficiary.

Chip LoCoco

Attorney at Law
 


Tuesday, August 14, 2018

Why should your College Age Child Execute a Power of Attorney?

When we think of a Power of Attorney, we often think that they apply to our elderly parents and being able to act on their behalf, financially, receive medical information, and make medical decisions for them.

However, we often overlook the importance of this document for our children who have attained the age of majority. (In Louisiana, that age is 18.) Imagine, your daughter, who just turned 18 the day before, leaves for college, miles and miles away.  Suddenly, just two nights later, you receive a frantic phone call from her roommate that your child just collapsed that night and was rushed to the hospital.


Read more . . .


Saturday, May 12, 2018

Common Estate Planning Mistakes Regarding IRAs.


For many people, retirement savings accounts are among the largest assets they have to bequeath to their children and grandchildren in their estate plans.  Sadly, without professional and personally tailored advice about how best to include IRAs in one’s estate plan, there may be a failure to take advantage of techniques that will maximize the amount of assets that will be available for future generations.

Failure to Update Contingent Beneficiaries

Assets in an IRA account usually transfer automatically to the named beneficiaries upon the death of the account holder, outside of the probate process.  If the account holder’s desired beneficiaries change, due to marriage, divorce, or other major life events, it is critically important to update the named beneficiaries as quickly as possible to prevent the asset from passing to an outdated beneficiary.  When updating beneficiaries, account holders should not neglect contingent beneficiaries – those individuals named to receive the asset if the primary named beneficiary is already deceased when the account holder dies.
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Thursday, March 29, 2018

A Special Recognition

We are proud to announce that our firm was just selected as one of the three top-ranked estate planning firms in New Orleans.

 https://threebestrated.com/estate-planning-lawyers-in-new-orleans-la

Thanks for all of your support.


 

 


Read more . . .


Tuesday, March 20, 2018

A Primer on Irrevocable Trusts

Many individuals are aware that a will is one way to plan for the distribution of their assets after death. However, a comprehensive estate plan also considers other objectives such as planning for long-term care and asset protection. For this reason, it is essential to consider utilizing an irrevocable trust.

This estate planning tool becomes effective during a person's lifetime, but it cannot be amended or modified. The person making the trust, the grantor, transfers property into the trust permanently. In so doing, the grantor no longer owns property, and a designated trustee owns and manages the assets for the benefit of the beneficiaries.

In short, irrevocable trust provide a number of advantages. First, the property is not subject to estate taxes because the grantor no longer owns it. Moreover, unlike a will, an irrevocable trust is not probated in court. Finally, assets are protected from creditors.

Common Irrevocable Trusts

There are a variety of irrevocable trusts, including:

  • Bypass Trusts -  utilized by married couples to reduce estate taxes when the second spouse dies. In this arrangement, the property of the spouse who dies first is transferred into the trust for the benefit of the surviving spouse. Because he or she does not own it, the property does not become part of this spouse's estate when he or she dies.

  • Charitable Trusts - created to reduce income and estate taxes through a combination of gifting and charitable donations.  For example, charitable remainder trust transfers property into a trust and names a charity as the final beneficiary, but another individual receives income before,  for a certain time period.

  • Life Insurance Trusts - proceeds of life insurance are removed from the estate and ownership of the policy is transferred into the trust. While insurance passes outside of the estate, it is factored into the value of the estate for tax purposes, so this vehicle is designed to minimize estate taxes.

  • Spendthrift Trusts – designed to protect those who may not be able to manage finances on their own. A trustee is named to manage and distribute the funds to the beneficiary or directly to creditors, depending on the terms of the trust.

  • Special needs trusts - designed to protect the public benefits that many special needs individuals receive. Since an inheritance could disqualify a beneficiary from Medicaid, for example, this estate planning tool provides money for additional day to day expenses while preserving the government benefits.

The Takeaway

Irrevocable trusts are essential estate planning tools that can protect an individual's assets, minimize taxes and provide for loved ones. In the end, these objectives can be accomplished with the advice and counsel of an experienced estate planning attorney. Are they for everyone. No. Every estate plan should be tailored to each individual client. Some clients do not like the element of control they lose through a irrevocable trust as they no longer indivdually own the assets but are now owned by the trust. However, any estate plan should at least contemplate the use and need of trusts so that all options can be viewed and looked into.

Vincent B. “Chip” LoCoco


Thursday, March 15, 2018

A Primer on Advance Medical Directives

While the main objective of estate planning is to help individuals protect their assets and provide for  loved ones, there are other important considerations, such as planning for incapacity. In short, it is crucial  to plan for the type of medical care people wish to receive if a serious accident or illness makes them unable to make or communicate these decisions. By putting in place advance medical directives, such as a durable power of attorney for healthcare and a living will, it is possible to plan for these unexpected events.

Durable Power of Attorney for Healthcare

A durable power of attorney for healthcare is commonly referred to as a healthcare proxy. This estate planning tool enables individuals to designate a trusted family member or friend to make medical care decisions in the event of incapacity. This person essentially acts as an agent, and is responsible for working with doctors and other medical professionals to ensure they provide the type of medical care the incapacitated individual prefers. If a healthcare proxy is not in place, it will be necessary for loved ones to ask the court to appoint someone make these decisions. In the end, this advance medical directive protects individuals in the event of an emergency and relieves others of the burden of going to court.

Living Will

A living will is another important advance medical directive that clarifies the type of medical care an individual prefers to receive if he or she becomes terminally ill and cannot communicate decisions about end of life treatment. In particular, a living will establishes whether certain measures, such as a ventilator or a feeding tube, should be used to prolong the individual's life

Other Essential Healthcare Directives

In situations when an individual becomes critically ill and does not wish to receive extraordinary life prolonging measures, it is necessary to complete a do not resuscitate order (DNR). In the event of a medical emergency, a DNR notifies doctors, nurses and emergency personnel not to use cardiopulmonary resuscitation to keep an individual alive.

Lastly, it is also important to ensure that other healthcare providers and organizations can access an individual's medical records and history. For this reason, it is necessary to complete a HIPAA authorization - a document required by the Health Insurance Portability and Accountability Act.

In the end, the possibility of becoming ill and not being able to communicate is not something most of us want to think about. However, putting in place these important advance medical directives can give you and your loved ones peace of mind knowing that your wishes will be carried out.

 

Vincent B. “Chip” LoCoco


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The Attorneys of Many & LoCoco assist clients throughout parts of Southern Louisiana, including but not limited to New Orleans, Metairie, Mandeville, Convington, Gretna, Arabi, Marrero, Westwego, Harvey, Chalmette, Kenner, and the Parishes of Orleans, Jefferson, St. Tammany, and St. Bernard, LA.



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